By TONY CAPACCIO, BLOOMBERG NEWS

Published 10:00 pm, Wednesday, April 27, 2005

The Boeing Co. is threatened with the loss of a $555 million contract to manage development of a new combat radio for Army ground troops and helicopter pilots.

The Army "sent a 'show cause' letter to Boeing notifying them the government is considering terminating the contract due to Boeing's anticipated failure to meet cost, schedule and performance requirements," the Pentagon said in a statement yesterday.

Boeing views the program as an chance to show it has expertise as an electronics systems integrator as well as an aircraft builder.

The Pentagon views the program as key to making the military more mobile and better connected. Ultimately, the radio would be given to the Marines and Air Force, too.

Boeing is reviewing the Army letter, spokesman John Morrocco said in an e-mail. "We are working with our customer to fully understand those concerns in order to prepare a comprehensive response in accordance with the government's request."